We Have Nothing to Fear but Fear Itself

I've been conferencing in Copenhagen this week with the global banking elite.

Despite the huge and urgent stresses on the global economic system - the presence of some of the key leaders in the sector has been impressive.

And policymakers have been tempted out of Brussels and Athens too - to discuss solutions.

It's an industry conference - the IIF who represent the global banks and who negotiated the Greek 'haircut' organise it - so some of the debate has been dry and technical but - as you may imagine - the event came to life yesterday in a session entitled: New Challenges Facing Europe.

On the afternoon when Fitch downgraded Spain's credit rating to BBB - the redoubtable chairman of Spain's strong performer bank BBVA Francisco Gonzalez - mounted a passionate defence of his country and of the euro. He said "markets are making a big mistake by betting against the euro".

The session came alive and another one of the most senior bankers in the room called for the IMF to supercede the EU at this time of crisis.

I glanced to my iPad to see former UK Foreign Secretary David Owen writing in The Times about the creation of a two speed Europe - a community focused on free trade or a deepening union - making sense of fiscal, monetary and political marriage.

The bankers in Copenhagen have been discussing a banking union - more details of which we should see at the end of June at the latest bout of EU summitry.

But that's about more rather than less Europe - and its not just the UK that's unconvinced about that. Several leading 'old Europe' banks from France and Germany represented in Copenhagen are deeply sceptical too.

And its no fix for the current state we are in.

In an invocation of FDRs inaugural address in 1933, BBVAs Gonzalez declared "We have nothing to fear but fear itself"

He may be right - but you tell me is it markets or politicians who are in charge?

It now feels like a moral not just a political or economic crisis.

We are now in the endgame of this long running saga - something has to give.

PS - I am now listening to a session on the Arab Spring - could there not be a more sharp contrast between hope and fear than that.